Citi won’t become insurance broker

Citibank — one of the largest distributors of financial products among the rich — has ruled out getting into insurance broking, a business that the RBI has allowed banks to engage in. Citibank has instead launched a distribution tie-up with Tata AIA Life Insurance, replacing a similar setup it had with Birla Sun Life.

The agreement to become a corporate agent of Tata AIA followed a regional multi-billion dollar deal with AIA in 11 countries. Although AIA holds 26% in the JV, India was understood to be one of the key markets for the deal.

“We have decided not to get into insurance broking as it would not allow us to have the same level of engagement as a corporate agency,” said Karthik Kaushik, country business manager (consumer banking), Citibank. Both Tata AIA and Citi are investing heavily in people, technology and resources in this partnership.

Once the most promising of life companies, Tata AIA has seen its fortunes swing, particularly after the global crisis that resulted in AIG farming out life business into a separate company. Tata AIA was also hurt by the absence of any bank partner for distribution.